China Plans to More Than Double Coal-Gas Output by 2015

China, the world’s largest energy user, plans to more than double production of its coal-bed methane in five years by 2015 to cut reliance on oil and coal.

The country aims to increase its annual output to 21 billion cubic meters by 2015 from 8.6 billion cubic meters in 2010, China Petrochemical Corp., the nation’s second-largest oil and gas producer, said in its online newsletter today, citing a five-year plan. The fuel, also known as coal-seam gas, is a form of natural gas trapped in coal beds.
China wants to triple the use of gas to about 10 percent of energy consumption by 2020. The country, which failed to reach a target for coal-bed methane production last year, will see rapid development of the industry in the coming five to 10 years, according to today’s statement from Sinopec Group, or China Petrochemical.
The country is likely to double the subsidy for coal-bed methane exploration to 0.4 yuan (6 cents) a cubic meter and increase government payment for power generated by coal-bed methane to 0.35 yuan a kilowatt-hour from 0.25 yuan currently, it said.
The nation also plans to set up a fund for exploration of the fuel, it said, without giving details.
China’s production last year was below a target of 10 billion cubic meters. Low returns and difficulty in delivering the gas to users have damped investment in the industry in the last few years, Hu Wenrui, chairman of China Petroleum Enterprise Association, said in May 2010.
The country aims to add 1 trillion cubic meters of coal-bed methane reserves by 2015 and 2 trillion cubic meters by 2020, according to today’s statement.
Coal-bed methane, gas in shale and tight gas, known as unconventional gas resources, may account for 30 percent of the nation’s gas output by 2020, Jie Mingxun, president of PetroChina Co.’s coal-bed methane unit, said in May 2010.
Annual shale-gas output in China may reach 20 billion cubic meters by 2020, Pan Jiping, a researcher at the Ministry of Land Resources, said on June 30.
Source: Bloomberg